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Tuesday, 06 September 11
INDONESIAS PROPOSED COAL EXPORT BAN MAY HAVE IMPACT ON THE INDIAN POWER SECTOR - DIPESH DIPU
.jpg) COALspot.com - This is a special interview about Indonesian proposed coal export ban by 2014, with Mr. Dipesh Dipu, Director of Deloitte Touche Tohmatsu, India.
The Indonesian government is currently in the process of drafting a new regulation that could ban the export of low-grade coal by January 12, 2014. This is likely to apply to coal below 5700 kcal/kg on air dried basis in value.
As of now Indonesia is producing around 150 million tons of coal with calorific value below 5700 GAD (according to chairman of Indonesian coal mining association). However by 2014, there are possibilities the total production of below 5700 GAD coal may reach more than 200 million per annum.
Will Indonesian coal export ban impact on the Indian fuel requirements?
The earlier grade of coal that was being considered for proposed ban has GCV of 5100 kcal/kg of less (adb), which can be comparable to 3800-4200 kcal/kg (arb) domestic coal available in India. This grade of coal has found favor in India primarily due to likely price advantage but economics of power generation based on such grade of imported coal may be a suspect. This considering that such grades of coal from Indonesia typically have high moisture content, which makes transportation cost per unit of energy generated higher. The quantum of the low grade of coal (<5100 kcal/kg adb) procured from Indonesia is likely to remain relatively low.
However, if the new definition of low grade coal is applied (<5700 kcal/kg adb), it may be reasonable to believe that such a ban may have impact on the Indian power sector as volumes in this grade of coal are expected to rise in the proportion of coal exports to India. Several of the acquisitions made by Indian power generation companies in Indonesia have been in coal blocks that will produce coal of this grade, and a blanket ban on the exports can jeopardize power plant development in India.
On the other hand, the domestic Indonesian market may not be prepared to consume all the coal mined of this grade in view of the power generation capacity addition plans in Indonesia. In such a case, the coal mine development is likely to be deferred. The Indonesian law makers may need to reconsider domestic market demand, investment climate in coal sector and impact of the legislation on the export revenues.
What is the alternative source for Indian power industry if the proposed coal export ban come into effect by 2014?
Indian power generation companies have been forced to look out for coal assets abroad due to the investment and regulatory environment within the country. India boasts of more than 110 billion tonnes of coal reserves, which largely fall within a 300 meters of depth. If the regulatory and investment environment is amended to allow greater participation of private sector Indian dependence on imports will be reduced.
However, for imports, India will continue to look at Indonesia, South Africa, Australia and newer destinations like Mozambique and Columbia. But these sources also have constraints, domestic demands in South Africa is likely to restrict quantum jump in exports out of South Africa. Indonesia has also proposed domestic market obligations. Mozambique may have infrastructure constraints for large volumes of coal being transported from Tete province to ports of Maputo, Ncala or Beira. Australian coal is of high quality but may have higher costs of mining and transport.
What would be the additional cost if Indian consumers switch their sourcing origin from Indonesia?
Indonesia has competitive advantage due to its geographical closeness. However, on a per tonne basis, assuming comparable quality, costs of transport may make marginal difference when compared with South Africa and Mozambique.
When compared to Australian coal, due to the high quality, cost of energy may well be comparable even though shipping costs are higher. Between Indonesian coal (5500 kcal/kg adb priced at USD 90 per tonne) and Australian coal (6500 kcal/kg adb priced at USD 120 per tonne), indicative variable cost difference of power generation may be about Indian Rupees 0.20 to 0.30 per kWh (electricity unit) in favor of Indonesian coal.
Will it affect Indian economy growth or this coal export ban is ignorable as India can easily identify alternative sources of fuel?
The magnitude of growth in power generation in India will necessarily mean that coal will remain the mainstay. Natural gas has had issues of availability. Nuclear plant development is facing socio-political challenge in view of the risks of technology failure. Development of hydel power has also faced issues of land acquisition, rehabilitation & resettlement apart from the technical issues of hydro-geological features. Renewable sources such as solar and wind generation are still projected to constitute a small portion of India power generation mix. Identifying an alternative source that can match coal in its accessibility, availability and affordability in the context of scale of capacity addition required in India is a challenge.
What is the Indian government's role on this issue, whether government has to come out with the solution such as easing Indian mining and environment law, open up mining for foreigners, G2G arrangement, etc…?
There is a need to look at domestic sources with pro-active and constructive approach and make all necessary legal and statutory amendments that make the resources available and mineable. Easing the regulations may not be one of such measures but making those regulations work in sync with each other in a time bound and predictable manner must certainly be.
There is certainly a case for opening the domestic coal sector for private participation, including independent miners, and for foreign participation so that newer technology and enhanced scale of operations are implemented in India. The regulation also needs to permit risk capital to come in for prospecting and exploration.
For imports the G2G relations can be leveraged to secure coal assets. India has good relationship with Indonesia and has also signed a tax treaty with Mozambique in 2010 which will facilitate investments. Government may also engage with these countries to ease exports to India and extend fiscal support to coal mining companies investing in mining and associated infrastructure development.
About Dipesh Dipu
Dipesh Dipu works as Director with Deloitte Touche Tohmatsu India Pvt. Ltd in the Energy and Resources consulting practice of the firm and anchors the Firm’s initiative in the mining and metals sectors.
He is a mining engineering graduate from Indian School of Mines and is a Chartered Financial Analyst (CFA). He has also done executive program in business management from Indian Institute of Management Calcutta. Dipesh has recently been awarded the Abheraj Baldota Gold Medal for the Young Mining Engineer of the Year 2007 by the Mining Engineers’ Association of India in recognition of his contributions in the improvement of mining industry in India.
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Saturday, 20 November 10
ITALIAN STEAM COAL MARKET HAS RECOVERED - ITALIAN COAL ASSOCIATION
Press Release - This year Italy will import 17 million tons of steam coal, up 3% from 2009, and 5.5 million tons of coking coal and PCI, up 37% over ...
Friday, 19 November 10
WE'LL THINK ABOUT COAL TOMORROW - ANALYSIS
The future of coal generation in Russia is in question. The largest energy companies have abandoned their initial plans to switch their therma ...
Friday, 19 November 10
DRY BULK MARKET ON THE ROPES WITH BDI PLUNGING TO 2,164 POINTS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the panamax markets suffering the most this week, but a ray of hope for the capesize market, which appears to be stabilizing after days of fall ...
Thursday, 18 November 10
WORLD COAL ASSOCIATION WELCOMES NEW CHAIRMAN & SHENHUA GROUP AS NEW MEMBER 17 NOVEMBER 2010
Press Release – The premier global coal industry association marks its 25th anniversary with a new Chairman and welcomes China’s lar ...
Thursday, 18 November 10
MUNDRA PORT AWARDED BEST PRIVATE PORT - COMMODITY ONLINE / HELLENIC SHIPPING
Adani Group owned, Mundra Port has been awarded the Annual Indian Maritime Gateway Award for the Best Private Port of the Year for the third consecu ...
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- Sojitz Corporation - Japan
- Billiton Holdings Pty Ltd - Australia
- Mjunction Services Limited - India
- Africa Commodities Group - South Africa
- Timah Investasi Mineral - Indoneisa
- Global Business Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- European Bulk Services B.V. - Netherlands
- McConnell Dowell - Australia
- Malabar Cements Ltd - India
- Bangladesh Power Developement Board
- Karaikal Port Pvt Ltd - India
- Dalmia Cement Bharat India
- Formosa Plastics Group - Taiwan
- Alfred C Toepfer International GmbH - Germany
- Ceylon Electricity Board - Sri Lanka
- Grasim Industreis Ltd - India
- White Energy Company Limited
- Sinarmas Energy and Mining - Indonesia
- The Treasury - Australian Government
- AsiaOL BioFuels Corp., Philippines
- IEA Clean Coal Centre - UK
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Romanian Commodities Exchange
- Agrawal Coal Company - India
- Price Waterhouse Coopers - Russia
- Sical Logistics Limited - India
- Sakthi Sugars Limited - India
- The State Trading Corporation of India Ltd
- Commonwealth Bank - Australia
- Bukit Baiduri Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Kumho Petrochemical, South Korea
- Indian Oil Corporation Limited
- Attock Cement Pakistan Limited
- Wilmar Investment Holdings
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GVK Power & Infra Limited - India
- Bhushan Steel Limited - India
- Anglo American - United Kingdom
- Carbofer General Trading SA - India
- Kepco SPC Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Baramulti Group, Indonesia
- Renaissance Capital - South Africa
- Asmin Koalindo Tuhup - Indonesia
- PTC India Limited - India
- Essar Steel Hazira Ltd - India
- Manunggal Multi Energi - Indonesia
- Indogreen Group - Indonesia
- Central Electricity Authority - India
- Energy Link Ltd, New Zealand
- Kapuas Tunggal Persada - Indonesia
- Maheswari Brothers Coal Limited - India
- Singapore Mercantile Exchange
- Siam City Cement PLC, Thailand
- Miang Besar Coal Terminal - Indonesia
- Thiess Contractors Indonesia
- Latin American Coal - Colombia
- Meenaskhi Energy Private Limited - India
- Orica Mining Services - Indonesia
- Eastern Energy - Thailand
- Australian Commodity Traders Exchange
- Videocon Industries ltd - India
- Global Coal Blending Company Limited - Australia
- Kohat Cement Company Ltd. - Pakistan
- Central Java Power - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- MS Steel International - UAE
- Gujarat Mineral Development Corp Ltd - India
- Thai Mozambique Logistica
- Intertek Mineral Services - Indonesia
- Goldman Sachs - Singapore
- Kobexindo Tractors - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Makarim & Taira - Indonesia
- Coal and Oil Company - UAE
- Xindia Steels Limited - India
- SMG Consultants - Indonesia
- Bukit Makmur.PT - Indonesia
- Heidelberg Cement - Germany
- CIMB Investment Bank - Malaysia
- Uttam Galva Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Chettinad Cement Corporation Ltd - India
- Marubeni Corporation - India
- Sindya Power Generating Company Private Ltd
- Vizag Seaport Private Limited - India
- Star Paper Mills Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Cement Manufacturers Association - India
- Kaltim Prima Coal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Petron Corporation, Philippines
- ICICI Bank Limited - India
- Bhatia International Limited - India
- Georgia Ports Authority, United States
- Karbindo Abesyapradhi - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Australian Coal Association
- Gujarat Sidhee Cement - India
- Wood Mackenzie - Singapore
- Eastern Coal Council - USA
- IHS Mccloskey Coal Group - USA
- Bhoruka Overseas - Indonesia
- Medco Energi Mining Internasional
- Maharashtra Electricity Regulatory Commission - India
- Mercuria Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- SN Aboitiz Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Samtan Co., Ltd - South Korea
- Economic Council, Georgia
- PowerSource Philippines DevCo
- Kideco Jaya Agung - Indonesia
- India Bulls Power Limited - India
- Jindal Steel & Power Ltd - India
- Lanco Infratech Ltd - India
- Tamil Nadu electricity Board
- Aboitiz Power Corporation - Philippines
- Siam City Cement - Thailand
- Leighton Contractors Pty Ltd - Australia
- Ambuja Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Sree Jayajothi Cements Limited - India
- Ministry of Transport, Egypt
- Parliament of New Zealand
- GMR Energy Limited - India
- Energy Development Corp, Philippines
- Altura Mining Limited, Indonesia
- Semirara Mining Corp, Philippines
- Ind-Barath Power Infra Limited - India
- Mercator Lines Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- San Jose City I Power Corp, Philippines
- Toyota Tsusho Corporation, Japan
- Aditya Birla Group - India
- Madhucon Powers Ltd - India
- London Commodity Brokers - England
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Larsen & Toubro Limited - India
- New Zealand Coal & Carbon
- Orica Australia Pty. Ltd.
- Parry Sugars Refinery, India
- Rashtriya Ispat Nigam Limited - India
- Electricity Authority, New Zealand
- Cigading International Bulk Terminal - Indonesia
- Indika Energy - Indonesia
- Electricity Generating Authority of Thailand
- Borneo Indobara - Indonesia
- Mintek Dendrill Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Riau Bara Harum - Indonesia
- LBH Netherlands Bv - Netherlands
- Antam Resourcindo - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Deloitte Consulting - India
- CNBM International Corporation - China
- SMC Global Power, Philippines
- ASAPP Information Group - India
- Planning Commission, India
- PetroVietnam Power Coal Import and Supply Company
- Neyveli Lignite Corporation Ltd, - India
- Merrill Lynch Commodities Europe
- Directorate General of MIneral and Coal - Indonesia
- Posco Energy - South Korea
- Port Waratah Coal Services - Australia
- Tata Chemicals Ltd - India
- Iligan Light & Power Inc, Philippines
- TeaM Sual Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Pendopo Energi Batubara - Indonesia
- Meralco Power Generation, Philippines
- Trasteel International SA, Italy
- Power Finance Corporation Ltd., India
- Jaiprakash Power Ventures ltd
- Pipit Mutiara Jaya. PT, Indonesia
- VISA Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- South Luzon Thermal Energy Corporation
- Interocean Group of Companies - India
- Oldendorff Carriers - Singapore
- Banpu Public Company Limited - Thailand
- Standard Chartered Bank - UAE
- Indo Tambangraya Megah - Indonesia
- Vedanta Resources Plc - India
- Ministry of Mines - Canada
- Minerals Council of Australia
- Therma Luzon, Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Indian Energy Exchange, India
- Savvy Resources Ltd - HongKong
- Bharathi Cement Corporation - India
- Chamber of Mines of South Africa
- Ministry of Finance - Indonesia
- PNOC Exploration Corporation - Philippines
- Salva Resources Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Coastal Gujarat Power Limited - India
- Independent Power Producers Association of India
- Indonesian Coal Mining Association
- Rio Tinto Coal - Australia
- GAC Shipping (India) Pvt Ltd
- Edison Trading Spa - Italy
- Bayan Resources Tbk. - Indonesia
- The University of Queensland
- Metalloyd Limited - United Kingdom
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